Wall Street's Secret Weapon: This Artificial Intelligence (AI) Stock for 2026

Geoffrey Seiler, The Motley FoolFri, February 27, 2026 at 6:20 AM UTC

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Key Points -

Alphabet has the most complete AI stack of any company.

By having developed its own world-class AI chips, Alphabet has a cost advantage over customers.

Meanwhile, it is using AI to power growth at its core search business.

10 stocks we like better than Alphabet ›

If you're looking for one company that is at the heart of artificial intelligence (AI), look no further than Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). The company has the most complete AI tech stack of any company on the planet.

It starts with its Gemini large language model (LLM), which is consistently rated among the best. It embeds Gemini across its variety of businesses, from cloud computing to search. Search is still Alphabet's largest business, and on that front, it has incorporated Gemini into its search functionality. This includes AI-powered features like Lens (visual search) and Circle to Search, as well as AI Overviews. Meanwhile, with AI Mode, users can also toggle between traditional search and a full-blown AI chatbot.

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This is all helping fuel more search queries and revenue growth for Alphabet. The company has a wide moat in this area because it essentially controls the gateway to the internet through its ownership of the world's most used web browser in Chrome and smartphone operating system in Android, both of which have over 70% market share. Meanwhile, through a search revenue-sharing deal with Apple to be its default search engine, it reaches much of the rest of the world. Alphabet has also signed a deal for Gemini to be the AI engine behind Apple Intelligence.

A data center.

Image source: Getty Images.

An emerging AI chip leader

Equally important as its Gemini model, Alphabet has also created world-class custom AI chips called Tensor Processing Units (TPUs). The company developed these chips over a decade ago, and they have been battle-tested, running much of the company's internal workloads. It uses these custom ASICs (application-specific integrated circuits) to train Gemini and run inference, which gives it a structural cost advantage over competitors. Its TPUs are both cheaper than Nvidia's graphics processing units (GPUs), and they consume less energy. This helps create a positive feedback loop, as with its cost savings, it can pour more money into AI infrastructure to build better models at a cheaper cost and grow out its cloud computing business. Alphabet is doing just that, with plans to spend a massive $175 billion to $185 billion on data center infrastructure this year.

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Alphabet is also starting to let some of its customers use its TPUs, creating another revenue growth driver. Morgan Stanley has estimated that Alphabet could generate $13 billion in revenue for every 500,000 TPUs its customers deploy. Meanwhile, the company is in talks with a few neocloud companies, including Fluidstack, as a way to expand the use of TPUs outside of Google Cloud.

As the only company with both a leading LLM and AI chips, Alphabet is one of the most important AI companies in the world and a top AI stock to own.

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Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, and Nvidia. The Motley Fool has a disclosure policy.

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Source: “AOL Money”